Hong Kong Lifts MPF Maximum Relevant Income to HK$25,000 From 1 June 2012

This article is a rewrite of a report from May 2012.

Twelve years after the MPF’s launch, contributions were raised for the first time: from 1 June 2012 the maximum relevant income level rose from HK$20,000 to HK$25,000 a month, lifting the contribution cap from HK$1,000 to HK$1,250. The MPFA estimated more than 510,000 higher earners would pay up to HK$500 more a month, adding about HK$217 million a month to total contributions — roughly 7%.

What is the MPF contribution rate?

Both employers and employees contribute 5% of relevant income, subject to minimum and maximum levels. As of 1 June 2012 the monthly cap was HK$1,250 each side; employees earning above HK$20,000 a month saw both their own and their employer’s contributions rise, by up to HK$250 each.

Old vs new contribution caps

Who was affected most?

About 425,000 employees earning over HK$20,000 a month moved to the HK$1,250 cap, and roughly 90,000 self-employed persons saw their annual cap rise to HK$15,000. HSBC — with over 30% market share — said it would notify members through newsletters, contribution statements and phone systems between February and August 2012, and reminded employers to update payroll systems in time: underpaying mandatory contributions attracts surcharges and even fines.